For Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) followers, the Bureau’s advanced notice of proposed Regulation F seeking comment on potential rules under the Fair Debt Collection Practices Act (“FDCPA”) should come as no surprise. The breadth of the planned rulemaking, however, could fundamentally change how third-party debt collectors, first-party creditors collecting consumer debts, debt buyers, and vendors providing material assistance to collectors (such as payment system or technology providers) collect mortgage, credit card, student loan, auto, medical, and other consumer debt.
Proposed Regulation F is merely a part of a larger trend. In the last year and a half, the CFPB has issued a rule defining a nonbank covered person (one with more than 10 million dollars in receipts from consumer debt collection of consumer financial products or services) as a “larger participant” subject to CFPB supervision; created special examination procedures applicable to those larger participants; issued two bulletins clarifying debt collector obligations (one providing additional detail as to what constitutes unfair, deceptive, or abusive acts or practices (“UDAAPs”) as described under the Dodd-Frank Act, and the second specifically describing and prohibiting certain misleading misrepresentations to debtors regarding the effect of debt payments on credit reports, scores, and creditworthiness); and brought and settled a major public enforcement action related to a company’s debt collection practices. In addition, the CFPB recently began accepting complaints related to debt collection activities, logging over 5000 complaints in a four-month span from July 10, 2013, to the present, representing approximately 30 percent of the CFPB’s daily complaint volume.
Concerned with these statistics, the CFPB is issuing a call to consumers, debt collectors, and industry professionals to aid the CFPB in creating rules to police the debt collection industry. As this is an advance notice, it does not contain any concrete proposed rules, but rather solicits information by asking 162 separate sets of specific questions on issues affecting the debt collection industry, information about current practices, and suggestions for improvements. Chief among the significant issues, the CFPB is considering whether the rules should address the following, or whether such changes are best effectuated by statute or other guidance:
Each of the above items individually has the capacity to effect extensive changes in the debt collection industry. A simultaneous modification of all of them, however, promises to completely revolutionize the process and requirements of debt collection and, therefore, it is paramount that comments be provided to the CFPB. Comments can be submitted in one of two ways: either through a formal response, or by submitting an informal comment electronically to RegulationRoom.org. The deadline for comments is February 10, 2014. As always, we would be happy to answer any questions regarding this notice and, of course, to aid in drafting any comments.